It is indeed modled from a driving bridle. Many trainers use this, especialy in lunging, to help get the horses head up. No, you wouldn't show with it. No, you wouldn't ride in it daily. Yes, it does help if you are riding saddleseat. A horse does not naturally carry his head up that high from the get go and it takes some work to get them to keep it there at first.
Are there better methods? Maybe, but in 4 years of working with two Saddlebred trainers I never saw anything work as good as a side check although we never had horses ridden in one.
IMHO it's no more 'cruel' than a tie-down or tightly adjusted running martingale. It doesn't really pull on the mouth much if at all.